Jason Hartman and Evan Moffic take a look at America’s one affordable trophy city: Chicago. The two explore the things going on in the area that are helping drive business and helping investors in the area make some good money. Jason and Evan look at the Memphis market and what the two like about the future of the city.
Investor 0:00
Remember listening to you on the treadmill going? This makes so much more sense.
Announcer 0:06
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:55
Welcome to Episode 1368 1368 Thanks for joining us today. I am doing today’s show with our client and guest host, Rabbi Evan morphic. Welcome, Evan, how are you?
Evan Moffic 1:09
I’m great. Jason, just still excited about the new year and all the opportunities we have.
Jason Hartman 1:14
Yeah. And the new decade to you know, it’s the time to have 2020 vision. And a lot of that really involves, I think, looking back on the last year in the last decade, because what an amazing time it was, it really was an amazing decade, in so so many ways. Now, I am known for my famous saying, it’s an amazing time to be alive. I think it really is. And when I say that I refer to mostly the economy. That kind of opportunities we have certainly technology is a big part of that. It really is amazing. Although I must say I am bearish on culture. I think I think culturally, America and You know, maybe other Western countries? I can’t speak to that too, specifically, but it has become a bit of a Kardashian disaster, honestly. But hey, I’ll be optimistic. Okay. Oh, you know, the thing you have to know about the economy, the culture, all of this stuff. It’s a pendulum. And a pendulum always swings back and forth. It goes through the middle. Just envision a pendulum in your mind listeners. Where does the pendulum stay the longest? In what segment of that trajectory? Does it move through fastest. Now I don’t know if this is actually true in physics. This is just my impression that it moves through the middle faster. Is that true, and it stays in the gravity
Evan Moffic 2:46
would be pushing it right through the middle.
Jason Hartman 2:48
He kind of hangs at the ends for a moment. You know, just like if you’re swinging on a swing set, you go through the middle fast, but at the ends, you kind of hang because you’re reversing directions. So you stay there longer. I don’t know what relevance that really has. But
Evan Moffic 3:05
I think it also you’re talking about the culture. And I remember I don’t know who said this, but someone said that politics is downstream from culture, and that some of what we’re seeing this divisiveness in our politics reflects the decline in our culture. And I think we’re living through that right now.
Jason Hartman 3:21
You know, one of the things I have said many times is that listeners and we’re going to talk about two markets. Today we’re going to talk about Chicago land. We’re going to talk about Memphis. So we’re going to get to some real meaty real estate stuff here in a moment. But one of the things I’m always saying to our listeners, is that you must watch old movies and old TV shows because you’ve got to have the perspective on just how much things have changed. Over the last couple nights. I watched a kind of a sick funny movie. I saw as a kid called and maybe some remember it high anxiety. It’s a Mel Brooks spoon, you know, it has some Alfred Hitchcock II stuff in and, and now I started after finishing that one last night, I started watching an Alfred Hitchcock movie called marny, which is interesting. It’s just so interesting to see em, I get it, you know, it’s a movie, it’s a show. It’s not perfectly realistic, but it’s certainly more telling than your memory, or what you envision a decade to be like. And so I like to watch these things, you know, that happened before I was alive. Or you know, when I was very young, because they really remind me of how, you know, people used to think and kind of how thoughtful life used to be. One of the completely unrealistic things about movies and TV shows today is that they portray people get this as actually having dialogue and meaningful conversations. Now the reality of it is most people just are looking at their phones, all Bhutan. Yeah, so it’s a strange time or in. It really is I, I also saw I’ll probably post this on my Facebook, someone posted a meme. A meme is basically one of those sort of funny pictures with a little tagline to it, right. And it was a meme of a skeleton with its arms stretched out holding a phone. Okay. And it says, This is what they will discover 5000 years from now about us.
Evan Moffic 5:31
But we have to stay optimistic. That is our as investors, you know, speaking as a rabbi and a client, we have to stay optimistic because yes, all this is true. But there is something within America within our system that does hold up. Oh, you know,
Jason Hartman 5:47
no question. And you know, in many other countries around the world, the same is true in with humanity in general. Yes. Right.
Evan Moffic 5:55
And what other option is there?
Jason Hartman 5:56
Yes. Right, right. No, I listened. I’m very optimal. mystic about a lot of things, it’s an amazing time to be alive. Yeah, I just think that we’ve got this culture of like over entitled people, I find it particularly different nowadays in hiring people, you know, hiring contractors to do various jobs and company needs done. I mean, they’re flaky over untitled, honestly kind of babyish, lack of a better word a lot of times, like, you know, oh, I need my safe space, you know, can’t do anything hard or can’t feel too imposed upon God. You know, everybody listening has the same experience with their property managers, their repair people that they hire to do jobs, and it is such a blessing to really have that experience where you deal with one of these wonderful but ever rare salt of the earth people that do a great days. work for a day’s pay, so to speak. And it’s just it’s really amazing. I got to tell you something, I am more impressed many times by that person who may well be a blue collar person, or you know someone in a mid or low level white collar job. Okay? That is that person that like autographs their work with excellence keeps their word does an honest day’s work for an honest day’s pay then am about some disgusting criminal high flying CEO making millions of dollars a year or in Jamie diamonds case. Hundreds of millions of dollars a year. You know, these people are not better people. Many times they’re worse people subtract the success and the money because what we think of is success is only one narrow kind of commercialized Madison Avenue definition.
Evan Moffic 7:56
Yeah. 100% agree.
Jason Hartman 7:58
Okay. One of the things I wanted to Talk about with you today as your client of ours. Yep, you’ve been buying properties in, in these other markets that we recommend. And you live in Chicago. Okay. And I recently watched one of these many videos that I watch, I watched you love YouTube, you know, only recently I’ve become a bit of a YouTube addict, you know, and what I love and it’s such an amazing time to be alive, you can find out about anything, and if someone of your wonderful fellow human beings made a video about it, or a podcast about it, and you can find out just absolutely anything you know, for one of my companies, I have to get a DUNS number at Dun and Bradstreet number and I’m like whoa, that’s a foreign world to me. I don’t deal with Dun and Bradstreet too much, you know? dnb and so I just went to their channel on YouTube and learned all about fantastic tech question, cooking, home improvement, anything you want to know you know, what kind of shampoo to buy whatever Well, I still need shampoo won’t be long until I don’t need it. But anyway, I watched one of these videos about the 10 best cities in America or the 10. Best to visit I can’t remember the title of it. And it confirmed what I have been saying for years that you look around the country. You ask someone from outside of the country or even inside of the country hasn’t traveled much. Where do you want to go? What do you want to visit? Well, the first thing they’re going to say is New York. LA, San Francisco. Those are gonna be the top
Evan Moffic 9:38
three still San Francisco. Yeah, what’s happening there? They don’t know
Jason Hartman 9:41
that. You know, people that haven’t been there don’t know what a disaster. Well, listen, LA is a disaster. New York City, is it? They’re all disasters? Okay. lefty politics catches up with you eventually, right? Yeah. And then after those sort of top three iconic cities, they’re going to say things like Miami Hello. Lulu, Boston. Now notice the common thing about all six of those cities I just mentioned. They all have very expensive real estate. They’re all cyclical markets, they all have bad, what I call remember my ratio that I invented the LTI ratio, land to improvement value, right not to be confused with a good old LTV or loan to value ratio.
Evan Moffic 10:27
You want low land costs and high construction costs,
Jason Hartman 10:29
right high improvement costs. And this is harkens back to the Hartman risk evaluator. If you don’t know what that is, if you’re a newer listener, you need a refresher. Just go to Jason Hartman, calm, use that handy dandy search bar. We have there, nobody else uses this. It’s so fantastic. I mean, I learned a lot just listening to just that one podcast where you unpack it. Yeah, thank you. It’s something it took me 19. I was 19 years into my career before I discovered that and it’s just been an amazing tool. To invest better, so good land to improvement ratios do not exist in any of those markets I mentioned. Now, let’s talk about the next market. That is where you live and many of our investors have invested and listen, I’ll be the first to agree that just like New York, LA, San Francisco, in many ways, Illinois, just like California, and you know, those states also in Chicago, the city, they’re mismanaged. I mean, yes. You know, they have financial problems. No question about it, California. After their three disasterous laws last year, on the verge, I’m telling you, this is coming. They’re going to repeal or in some way, attack prop 13. They’re already doing it on commercial real estate. So property taxes in California, are going to be released to increase dramatically. It’s gonna happen, folks get Chicago’s got the same issues right as all these iconic places do, but Chicago or Chicago when I am when I say that I mean the Greater Chicago metro area Chicago land, okay. has the same thing. But guess the thing that Chicago land is different. It is the only cheap, iconic city in America. It is the only one. It is totally unique in that concept. It’s the only iconic American city with good LTI ratios land to improvement ratios with good cash. Good RV ratios. Yes. I know. Property taxes are high. They’re they’re not as bad as some places but they’re higher. They’re certainly high in Texas and New Jersey. For God’s sake New Jersey. Oh my God, that’s the worst of the worst. But Chicago is an iconic city and it’s only one out of the 10. I saw on that video. That by the way I agree with that has inexpensive Real Estate that you can make sense out of thoughts.
Evan Moffic 13:02
Yeah, I 100% agree. And I think Chicago living here, it’s sort of a great mixing. I’d say Chicago is half Indianapolis and half New York.
Jason Hartman 13:13
That’s a great metaphor. Okay. Half Indianapolis, which is, by the way, Indianapolis is my longest running market. We have been in Indianapolis for longer than any other market. still love it. I purchased several properties there. India’s just a great Midwestern type linear market. So Chicago, half Indianapolis and half New York City Really?
Evan Moffic 13:35
Yeah, I think so. You know, the downtown, which we would never have clients buy there is very high end. I mean, they’re beautiful, you know, five $6 million condos on Michigan Avenue, beautiful developments, very high end retail. And then you go up the North Shore, and you know, these are median 500 $600,000 homes. It’s kind of like you know, suburban New York, and we would never buy there, but You go to the other part of the city, and it’s very much like Indianapolis, it’s kind of working class. It’s, you know, nice bread and butter homes nicely constructed good jobs. Yes, a little bit higher taxes because the city, you know, there’s a long history of politics. And you know, there’s a lot of social services. So the taxes are a little bit higher, but they’re just so many jobs. And so it really is a market where you have to be specific and you have to have good people that understand the dynamics of it. And if you invest in the right areas, it is like investing in Indianapolis,
Jason Hartman 14:32
you know, and I just want to say that at the moment, at the time of this recording, we are not recommending Chicago properties, okay? Part of it is because we’re being pitched all the time with people that want us to sell their properties. We’ve got, you know, one person that we worked with in the past that you know, we like pretty well, he runs a good business, you know, he’s got like 300 and some odd properties and wants to peel off some of those and sell them and diversify his company’s portfolio debt. I asked if we would sell them. You know, we said, we’re just not interested right now. And we’ve had a couple of bad apples in Chicago land that we’ve worked with, you know, we’ve certainly had many of them in Kansas City that city is. I’m just not a fan of Kansas City for I mean, there are there good bad people everywhere, obviously. But for those investors who own properties in Chicago, and you know, we haven’t recommended it lately, but we may well be back recommending it in the future. You know, there’s there’s a lot going there’s a lot of reasons that you have going for it. Now, one of the interesting things you said to me and you are certainly don’t strike me as any kind of liberal socialist, Evan. Is, is you said that your former mayor who was certainly famous during the Obama administration, Rahm Emanuel, who is a guy I always vilified. You said he was a really good mayor, huh?
Evan Moffic 15:52
Yeah, he was. I mean, he was he’s a clintonian Democrat. I mean, he is very pro business, or at least he was as mayor. What he did Was he really focused on bringing in businesses to Chicago? I think it was under him. It might have been under Mayor Daley that Boeing moved to Chicago. Boeing’s having a hard time now, what’s the big manufacturer that had been based in Peoria huge. They moved to downtown Chicago. He really pushed businesses to come here. He pushed higher end restaurants. I mean, Chicago is now pretty much an extraordinary foodie destination. He really wanted Chicago to be a global cosmopolitan city and he pushed for it. And he really also tried to improve the public schools. This is part of the challenge with Chicago is you get this image on the media of violence and it’s there there’s no question about it. It is though with their care homes,
Jason Hartman 16:39
the violence. I mean, listen, I used to manage part time a business that my mother owned when I was in
Evan Moffic 16:47
high school. Oh, yeah, the chicken place
Jason Hartman 16:48
It was a pioneer chicken franchise kind of like a KFC in I mean, if you know if you know the area or just look it up on the map, I don’t know what it’s like now. It’s probably terrible still, but it was on the corner of La Cienega and Rodale Road Not to be confused with Rodale drive in Beverly Hills. They call it rodeo road. Okay, whatever. In Los Angeles, it wasn’t a terrible area. And I remember one night Evan, we closed the chicken store. And you know, I was maybe 17 years old, 16 years old at this time. And I remember we had this great cook, one of the great cooks that we had that you know, this terrible chicken franchise my mom owned, we drove him home. And I think we close the store at like nine o’clock. And so it was about 930. By the time we drove him home and in my mom’s little crappy us, Toyota. We went through this area that I will never forget how bad it was, how scary it was. Police cars everywhere. There was never a cop alone. Every police car had two police officers in it. If you got out or if your car broke down. I think you would be seriously risking your life in that area loss. And yes, everybody remembers during the Rodney King riots, the Reginald Denny attack when they pulled him out of his truck and, you know, hit him on the head with brick and, you know, almost killed the guy. I mean, there are some really bad areas in New York, LA. Every city has them. Certainly San Francisco. Oh, my God, San Francisco’s gone down the tubes, you know, in many areas. So Chicago has that too.
Evan Moffic 18:27
Right? Yeah, it does. It does. And I think this is getting into politics. But I think sometimes people pick on Chicago as sort of an IT exemplifying these, you know, bad liberal governance. And there is some truth to that because Chicago, essentially, I don’t think there’s been a republican elected to any office in the Chicago area for about 40 or 50 years. I mean, it really is a backlash back to sort of parallels the California vibe. Yeah. Yeah. The thing is, though, is that there is sort of this thing of Chicago Democrats, you know, they are a little bit more pro business, at least historically. But one great thing that right Manual did well two great things I think are good for, you know, people who invest in Chicago or one, there’s a big expansion going on at the airport. I mean, O’Hare Airport is a jewel, yes, there’s always delays because of the weather, but it is one of the largest airports in the world. And so it has lots and lots of jobs, lots of industry right around it. And then of course, there’s the Obama library, and the Obama library is going to be a huge, I mean, this is tons of jobs,
Jason Hartman 19:25
tons of activities. I saw an article about the Obama library and how significant that is for the business climate in the area. And I’m no Obama fan, folks. I know, you probably all know.
Evan Moffic 19:36
It’s good. I mean, and where the Obama library is, is actually very well situated for the part of Chicago that’s like Indianapolis, you know, it’s on the sort of towards the south side, and probably 15 to 20 minute drive from a lot of the Chicagoland areas where people have invested. So it’s very good. And in general, public schools are getting better very slowly but surely, they are getting better. So for all The problems with taxes. There are a lot of good things happening in Chicago. And as we talked about at the beginning of the show, there’s a pendulum, you know, and I think the pendulum is swinging in a little bit more positive direction. Yeah.
Jason Hartman 20:11
And you know, just to be clear, I don’t love Chicago. Okay. I think I’m on No, yeah, sorry. I know. Are you
Evan Moffic 20:18
a native? Did you grow up there? No, Milwaukee, but my family is all native.
Jason Hartman 20:22
Okay, God, so there, so yeah, yeah. How long have you lived in Chicago?
Evan Moffic 20:25
Now lived here? 15 years?
Jason Hartman 20:27
Okay, good. So I’m not like any big giant promoter of it. I think most of the action for real estate investors is in the southeast in the warmer areas. You know, there’s a few exceptions. Certainly, we love Indianapolis. That’s been a great market for our clients. And, you know, our clients have made a ton of money there. But I think mostly actions in the in the warmer climates south. Okay. I think everybody listening would certainly agree. But I just want to point out some of the really good things Chicago is very unique in the sense that it’s actually A left wing place. That kind of works. And it’s the only cheap iconic American city. Okay, so I’m just trying to balance out some of this stuff that that’s all I’m doing by having this discussion.
Evan Moffic 21:14
And Jason, you’ve talked about the power of inertia, too. And the fact you know that sometimes we just let our real estate sit in overtime. I think Chicago kind of benefit from the power of inertia, it is been one of the great American cities for over 100 years. Even if they’re higher taxes, it’s going to persist in that way. There’s so many things that are just irreplaceable about the city, and that that will continue
Jason Hartman 21:34
good stuff. Okay, let’s switch gears a bit and wrap it up with a little talk about another market. Well, a market we like more, okay. This is a market that we’ve been recommending for many, many years. And it’s just one of these markets like a machine. It’s certainly not without its problems. We’ve had some good and some bad providers in this market. We’ve shuffled recommendations around to recommend our clients to the best providers. You know, I own properties here as well. Of course, Memphis, tell us your thoughts on Memphis. We were having a discussion about it recently. And, you know, I’ve said enough about it. I’d rather you as a client, talk about it. Evan,
Evan Moffic 22:12
I love Memphis as a client. I think it’s just fantastic mainly because of jobs. And FedEx really dominates or it’s a big part of the city. There’s also I have a member of my congregation, he was telling me his son, moved to Memphis I was so my ears perked up immediately. I said, Oh, what, what brought him there. And he worked for AutoZone, which is centered there. And this is a kid who grew up in Chicago, went to college on the East Coast, and he’s living in Memphis. So I think there is a lot of good stuff happening for Memphis, I think really, it’s centered on jobs. FedEx has probably benefited from tariffs, right? There’s more things happening inside there’s more good, solid blue collar jobs in Memphis has some great attributes. They’re irreplaceable. Its location on the river. It’s a transportation hub. On fact, I just read a recent article in the Wall Street Journal that said X has so much need for jobs that it is actually sent a bus to the Mississippi Delta two hours away to bring in workers for all its three shifts. So there really is just incredible job security there. And yes, they will have its ups and downs, you got to be very neighborhood centric. That’s why it’s critical to work with an investment counselor, and with a good provider that’s been vetted because Memphis does have certain areas that you wouldn’t want to invest in. But with the right provider and right counseling, it’s fantastic. And it has some appreciation. Yeah, over the last few years.
Jason Hartman 23:34
Yeah. And of course, really good cash flow. So go to Jason Hartman, calm talk to your investment counselor, one 800 Hartman, you can reach them on the phone and talk about Memphis or any of our other markets, Indianapolis, we can commiserate over Chicago, if you really want to buy in Chicago, we can refer you to people but we’re not actively marketing Chicago at the moment. One of the things I want to share is that I read a great book that you know, many years years ago, I want to say I read this book in about 1989. And I have not had this guest on the show, I gotta request him again. But Paul Zane pilzer. He’s written several books. I used to love his books. And this book was called unlimited wealth, unlimited wealth, the theory and practice of economic alchemy. And remember, I don’t know if he said it in this book or not, but that was a really good book. But you know, you can tell that thoughts are brilliant when they last here I’m talking about this book from 1989. And it’s 20. Okay. And one of the things he predicted I’m not sure he predicted in the book or in some other writing of his or interview I heard, but he said that the two biggest industries of the future and not necessarily in order, okay, but the two biggest industries will be adult education and shipping or logistics. I can’t wait Remember how he said it? Meaning that companies like FedEx ups are going to just explode. Now, he said this before the internet was public. Okay? He said that when the internet was a military application that nobody ever talked about, okay? And look at how true both of those predictions have been of his right. I mean, adult education. That’s what we’re doing right now. Okay. I mean, yes, there’s a few kids listening to us, but it’s mostly adults in 189 countries. Well, my kids
Evan Moffic 25:29
my 12 year old listens.
Jason Hartman 25:32
The question is, does your hedgehog listen?
Evan Moffic 25:35
I will check it out. I’m gonna play it for him. Later today,
Jason Hartman 25:39
check out the episode I did where Evan talked about his pet hedgehog, and we we made the metaphor to real estate investing. I thought that was pretty, pretty creative. And Jim Collins book Good to Great. Yes. So shipping and logistics. You know, Memphis is, I think the logistics capital of the United States and course we have the biggest consumer market on planet earth here. And look at what you’ve got in Memphis, you’ve got all of those FedEx jobs. It’s pretty amazing as a market pretty dynamic. Oh, yeah. One of our local market specialist Devon said that they love Memphis, because everybody works for FedEx makes 40 grand a year and rents.
Evan Moffic 26:22
Yeah, yeah. It’s great. I mean, it’s a unique city in that way. And there’s some history to it, too. You know, I think you said on another podcast that there is also some potential now we, of course, appreciation, as you always say, is the icing on the cake is right. Yeah. But there is some potential I think you said it, you know, Memphis could become kind of like Atlanta, in that there’s growth, and there’s industry and it’s very favorable tax law. There’s there’s no state income tax in Tennessee. So there are a lot of good things that will bring more and more people to Memphis.
Jason Hartman 26:56
I agree. Good stuff. Well, hey, thanks for joining me today. Any Comment you want to make to wrap it up bond anything?
Evan Moffic 27:02
Well, no, I think the one comment is just this is such an exciting time this a new decade. I mean, think 10 years from now. Do we want to participate in the growth of our economy think 10 years from now, do you want to own homes in Memphis? Do you want to own homes in Atlanta or in other markets where there’s great possibility? I think this is such a great time to be reflective. So take that deeper perspective and ask yourself and then act of course, which makes all the difference.
Jason Hartman 27:28
Excellent. Well said, Go visit us at Jason Hartman calm or call us at one 800 Hartman and until tomorrow, happy investing. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website Hartman Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice or advice and any other specialized area. Please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.
